Here at Embrace Hearing, we’re big fans of the Better Hearing Institute. Their paper from October 2009, "25-year Trends in the Hearing Health Market," has a lot of good info on hearing aid costs and helps to answer a question we hear pretty often:

[hesitant tone] "You're selling hearing aids... aren't there a lot of people who do that already?"

Based on the MarkTrake VIII database, the leading source of hearing aid data, and syndicated widely by trade publications, the paper raises some important points that help explain why we think this is exactly the right time to enter the hearing aid market.

First, hearing aids are expensive, and getting more expensive. The average retail price of a behind-the-ear (BTE) hearing aid in 1989 was $651. In 2008, the most recent data available, it was $2,326. This annual inflation of over 6% far exceeds the 3% inflation in the general economy, in an era where the cost of other electronic devices has fallen sharply.

However, the number of consumers paying full price for hearing aids is decreasing. In 1989, 24% of hearing aid purchasers involved a third party co-pay of some sort (including purchases covered in full by the Veterans Administration). In 2008, the number was 40%

This is an encouraging trend, as it makes hearing aids more affordable and accessible for the population. However, as a larger part of the population is covered by insurance, the industry can further increase prices because hearing aid costs are hidden to consumers -- instead, they appear in the form of higher insurance prices. Moreover, for the 60% of hearing aid users not covered by insurance, higher out-of-pocket costs are an unfortunate reality.

While prices and insurance coverage have increased, distribution in 2008 is largely unchanged. Audiologists' and Hearing Aid Specialists' offices remain by far the most common locations to purchase hearing aids. This means they have a major role in determining hearing aid prices. While these offices provide excellent and valuable care, it's important to realize that they have a financial incentive to keep hearing aid prices high.

So why is this? First, a recent industry trend is that many clinics are now owned by manufacturers, whose core business is maximizing profit on hearing aid sales. But more importantly, Audiologist and Hearing Aid Specialist offices are also retailers run as profit-maximizing businesses, and their core product is hearing aids. Said another way, if it were in their financial interest to make hearing aids affordable, they would do so.

The result is that while hearing loss prevalence has increased significantly, hearing aid adoption has stagnated at 25%, and the number one reason is high price.

The current distribution system has created a two-tier market that leaves everyone with hearing loss worse off. Those who are comfortable paying $4000 for a pair of hearing aids get the medical care they need and gain improved quality of life -- but they are dramatically overpaying. Those who cannot afford to pay such high prices are shut out of the market entirely. In short, the winners in the current system are manufacturers, audiologists, and hearing aid dispensers -- and the losers are people with hearing loss.

So that's why we decided to launch Embrace Hearing. We are sure that alternative distribution will eventually emerge to reduce costs and better serve people with hearing loss. We're excited to be doing our part to reduce hearing aid cost -- and we hope you're just as excited as we are.

We’re always happy to hear your thoughts so please, any comments, suggestions, feedback would be appreciated in the comment field below.

Comments

Posted by Auda Ashley on January 06, 2013

Have had VA hearing aids for over two years. Have to take one out to talk on the phone. Cousin had VA but bought behind the ear from Costco and loves them. I am a music fan and want real sound quality.